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Place university academics on an annual wage system

by Takamitsu Sawa

“Before the end of fiscal 2015, it may be necessary to shift the wages of all Japanese university teachers in engineering and natural sciences and life sciences — fields which are competitive internationally — to an annual salary system while abolishing a compulsory retirement system at a fixed age and to cover parts of their wages with funds obtained from outside sources like business enterprises as much as possible.”

This is a recommendations contained in a material distributed on Sept. 18 when the government’s industrial competitiveness council held the first meeting of its panel on employment and human resources.

In the United States, salaries are usually determined on an annual basis in all sectors. In stark contrast, professional sports are the only area in Japan where remunerations are fully fixed on an annual basis.

In professional baseball, for example, at the end of a season, a pitcher’s performance figures are clearly expressed numerically, like his wins, losses, earned run average, saves and strikeouts, making it easy to reflect those numbers in his annual salary for the ensuing year. The player himself can guess how much he will receive for the following year because the statistics show how well or poorly he performed.

If the amount offered by the team management happens to be much lower than anticipated by a well-performing player, he would not immediately sign the new contract and would instead continue negotiations. If the talks break down, the team would seek to trade that player. If the team has indeed underestimated the player, there should be another team willing to hire him for the amount the player seeks. On the other hand, if the player was overestimating his own value, there would not be a trade deal.

In reality, wage bargaining between a team and a player seldom breaks down, indicating that the performance of a professional baseball players is evaluated fairly objectively. This is why the annual remuneration system works.

Professional baseball is becoming globalized at a rapid pace thanks to the fact that players are paid in annual salaries. Many Japanese teams recruit players from the United States’ Major League Baseball to serve as the teams’ key players by offering sums that are disproportionately high compared with what their Japanese counterparts get. In recent years, outstanding Japanese players have been seeking to play in Major League Baseball while Major League Baseball scouts are paying keen attention to the abilities of Japanese players.

I would like to review whether it would be appropriate to change the wages of Japanese university teachers to an annual total salary system. At Japanese universities, all matters related to the positions and statuses of instructors are determined by a faculty meeting composed of professors, and sometimes other teachers, that is called “kyoju-kai,” literally a meeting of professors.

No such body exists at U.S. universities. Instead each department’s chairman is elected by teachers belonging to that department for a two-year term. The chairman then appoints five or six members to an executive committee, which in turn deliberates on and decides the appointments, wages and other matters for the department. But those decisions are informal decisions and subject to approval by the academic senate, composed of councilors chosen from within the university.

A group of departments pursuing similar subject matters is called either a school or a college and is headed by a dean, who is appointed by a provost, who in turn is appointed by the president of the university.

The power to appoint a university president rests in a board of regents or trustees, etc. It is quite rare for a university president or a dean to be selected from among the university’s instructors. This has led to the creation of markets for university presidents and deans. In selecting candidates, emphasis is placed on their administrative skill, and their academic achievement takes a backseat.

In the U.S., how does an executive committee determine the annual wages of instructors belonging to the department? At the end of the academic year in June, each instructor submits to the departmental chairman a report of his or her achievements for the past year, listing papers appearing in professional journals, books published and presentations made at academic meetings. An instructor’s teaching skills are evaluated on the basis of quantification of answers to the “course evaluation questionnaire” filled out by students who took the instructor’s classes.

The instructor’s salary for the ensuing year is decided on the basis of the evaluation his or her teaching skills and research activities. The departmental chairman sends a letter to each instructor saying something like, “We decided that your annual remuneration for the coming year will be XXX dollars. If you are not satisfied, please feel free to contact me.”

For the annual salary system to work effectively, it is important that universities constantly scout teachers from other universities. Conversely, for the competition in scouting to become common and widespread, salaries must be determined on an annual basis. If, for example, one university wants to hire a teacher from another university whose papers are frequently cited in order to raise its standing in the Times Higher Education ranking, it must be prepared to offer a high salary.

In other words, in the U.S. there exists a market for university teachers for each education and research field of specialty. Since all universities, be they private or state-run, have strong incentives to raise their status in each field, there is a fierce competition for recruiting talented teachers.

Unfortunately, in Japan there is no market for recruiting university teachers. At both national and private universities, seniority rules play a predominant role in determining teachers’ salaries. The Ministry of Education, Culture, Sports, Science and Technology is encouraging universities to reflect the evaluation of instructors in deciding their remunerations. So far, however, this has not gone any further than making some differences in the amounts they receive in their year-end bonuses.

Universities in Japan are ranked in terms of their prestige and reputation. More prestigious universities sometimes recruit instructors from lower-ranked universities. Among the national universities, however, there is no difference in pay scales. So the only incentive for a national university teacher to move to another national university is its prestige and location.

Adopting an annual compensation system is absolutely indispensable if Japanese universities are to become globalized through the recruitment of excellent teachers from America and Europe.

The recent rapid globalization of professional baseball is due in a large measure to the annual salary system that has been in place for quite some time. At Japanese universities, on the other hand, it is difficult to evaluate the research performance of individual teachers and students’ responses to course evaluation questionnaires cannot necessarily serve as an effective means of assessing teaching skills.

In professional baseball, the annual remuneration system has been functioning well because players are actively scouted. When a university teacher is recruited by another university in Japan, however, wages and other working conditions do not serve as incentives. As a result, the transfer of university teachers primarily takes place on the strength of the prestige of universities. Moreover, at more than a few universities a majority of the teachers are also alumni.

In short, efforts to introduce an annual remuneration system for university teachers in Japan are being hindered by the immaturity of the market for university teachers. It may be next to impossible to try to recruit outstanding European or American professors to Japanese universities under the prevailing seniority pay system since an average annual salary for professors teaching at prestigious American universities is close to $200,000.

In academics as in other fields, traditional Japanese systems and practices are hampering the nation’s globalization.

Takamitsu Sawa is president of Shiga University.